The Insurance Maze
Finding the best deal for your company’s insurance needs
If you are like most contractors and landscapers, insurance can take a big bite out of your monthly profits. You know the necessity and value of insurance on your vehicles, but insurance can feel like a maze where every turn adds cost and you’re often left wondering if you have adequate coverage.
Here are some things you can do to get the best value for your money, in terms of both coverage and cost, and help navigate the vehicle insurance maze. Hopefully you can come out the other end without feeling dazed and confused and with a few more dollars in your pocket!
Make sure you have the right coverage.
Getting caught in a situation without insurance or without enough coverage can cost you a lot more than paying insurance premiums. Here are some common coverages to consider:
* Bodily Injury Liability for other driver’s and passengers’ injuries or death for which you are responsible;
* Property Damage Liability for damages to someone else’s property for which you are responsible;
* Comprehensive for your vehicle in case of losses resulting from an event other than an accident, such as theft or a tree branch falling on your vehicle;
* Collision for your vehicle when your car hits, or is hit by, another vehicle;
* Uninsured/Underinsured Motorists for your injuries, damages or death caused by an at-fault driver without insurance or without enough insurance to cover all costs; and
* Medical Payments for care expenses incurred by you and passengers in your vehicle injured in an accident.
There are usually some external factors guiding what coverage and levels of coverage you need. Depending on the business you are in and where you are located, you may need to meet industry-specific and state insurance requirements. If you are a subcontractor, you also may need to meet insurance requirements imposed by your customers, in order to obtain certain contracts. Make sure someone in your company is responsible for keeping up on insurance requirements for your business.
If you use a utility or tool trailer for your business, don’t forget to include coverage for the trailer. Also remember coverage for your valuable tools and equipment. These are generally covered under a commercial “inland marine” policy added on to your vehicle insurance.
It’s also important to keep you pickup’s insurance policy updated. Add a new winch, lights, tool box or business radio to the truck, be sure your insurance agent knows what was added and the replacement value in case those items are stolen or damaged later on. *(Replacement value is a lot different than depreciated value.)
Cutting back coverage on areas where you need it is not the place to save money on insurance since being uninsured or underinsured could cost you much more in the long run. It’s a good idea to keep a big picture view in mind when deciding on coverage.
An experienced insurance agent can be an invaluable asset for your business. A good agent will ask you a variety of questions to determine the types of coverage that make sense for your business. The agent should start with the question of whether you even need a commercial policy since some small businesses can obtain adequate coverage through a personal auto policy.
A commercial insurance agent will take the time to learn about you and your business. Then the agent can help you select the right coverage so you are not underinsured or over insured. You definitely don’t want to end up with coverage you don’t even need.
Some of the large national insurance companies have the option to purchase and manage your insurance exclusively online.
However, these companies also offer insurance through local insurance agents. There are many options when seeking out an experienced insurance agent, from local agents representing a single company to independent insurance agents who represent multiple insurance companies.
Find an insurance agent with a good reputation in your community. Visit their office and consider the professionalism of the staff. Ask for and check customer references. Shop around and get multiple quotes.
It’s important to take the time to do your homework and find an agent who can partner with you and your business.
You probably know from your personal auto insurance that qualifying for discounts is the best way to save money on premiums. The same is true of commercial vehicle policies. There are a variety of commercial auto discounts and your agent will help determine which ones you qualify for, depending on your business type.
For example, some companies offer a business discount for customers who have been in business for more than three years and a package discount for customers who purchase other business policies from the company along with their business auto policy.
You’ll also find insurance companies offering discounts for paying the entire premium up front and for paying your premiums through EFT (Electronic Funds Transfer). It seems like a simple thing, but even your method of payment can save you on insurance premiums.
Ask questions, talk to other business owners, find out what discounts are out there, and make sure you are taking advantage of all that apply to your business.
There is no black-and-white advice to give when it comes to this insurance dilemma. But most people know that if you increase your deductibles, you lower your premiums.
Lowering premiums is an attractive proposal, but make sure you have the capital in your business to pay the deductible in the event of a claim. It’s a good way to control your insurance costs, as long as you have evaluated the risk and have a plan for paying that higher deductible if you end up dealing with a claim.
You don’t have to end up lost in the insurance maze. With a little homework and the help of a reputable, experienced agent, you can choose the right coverage and limits to protect your vehicle and get the best value possible for your business.
About the author: Robin Walton has been a licensed contractor for over 20 years and has 16 years of financial accounting and systems experience. With a degree in accounting/economics and hands-on construction experience, she understands the day-to-day business of contractors and landscapers.